President Donald Trump is looking at Australia for his overhaul of the U.S. retirement system, as he told reporters on Monday that his administration is working on a savings plan modeled after the country’s superannuation program.

“We’re going to be doing also something we’re working on later on, and it’ll be also, I think, very popular, and I guess the best definition is they have a plan in Australia, which people really like,” Trump said, as reported by The Hill, during an event at the White House commemorating the official launch of Trump Accounts.

The president’s proposal comes at a time when the U.S. retirement system, which is funded largely by payroll contributions from current workers, has come under significant pressure. The U.S. population is rapidly aging, birth rates are declining and experts worry that there are not enough workers to support a growing number of retirees.

Trump first floated the idea of an Australian-inspired retirement savings plan for the U.S. in December, when he said at a news conference: “There’s a certain Australian plan that people are liking. … There’s a plan where, not for children necessarily, but for people, working people, and we are looking at other things different from this. I think this is very unique, but different from this, but very important.”

Newsweek contacted the White House for comment by email on Tuesday outside standard working hours.

While Trump Accounts are federal tax-advantaged investment accounts for children under 18, with the idea of helping families build wealth for children early in life, the new savings program the Trump administration is reportedly designing would target adults.

“That would be more for grown-ups, as opposed to children, but it’s something that’s going to be great, I think, if we can get it done. And we’re going to try very hard,” Trump said on Monday.

Social Security and the State of US Retirement

The U.S.’s aging population and declining birth rate represent something of a financial reckoning for the Social Security program, which sends monthly payments to roughly 75 million Americans, including about 56 million retired workers and their dependents. Millions more collect disability benefits or cash assistance through the program.

But Social Security is expected to face a dramatic cash crunch soon, as the funding that helps pay retirement benefits—the Social Security Administration’s Old-Age and Survivors Insurance trust fund—is projected to be depleted by late 2032.

If Congress does not intervene, monthly benefits for retirees and survivors will face an automatic reduction of about 22 percent, according to the Committee for a Responsible Federal Budget. No state would be spared.

House Speaker Mike Johnson, a Republican from Louisiana, has called for Social Security reform if Republicans keep control of Congress in 2027, warning of the program’s looming insolvency. But Senate Republicans have pushed back against it, saying talks of making Social Security reforms would end up hurting the party ahead of the midterms.

“Addressed? Reformed? That’s usually code for ‘cut.’ I’m not in favor of that,” Republican Senator Josh Hawley of Missouri said in June, as reported by The Hill.

During his 2024 presidential campaign, Trump promised not to cut Social Security benefits—a move that would likely be unpopular among U.S. voters. “I will never do anything that will jeopardize or hurt Social Security or Medicare,” he said, adding, “We’ll have to do it elsewhere. But we’re not going to do anything to hurt them.”

How Does Australia’s Retirement System Work?

Australia’s retirement system is based on a three-pillar model:

The superannuation guarantee, also known only as “super,” requires employers to contribute at least 12 percent of an eligible employee’s ordinary earnings to an approved fund. This money is then placed in an investment fund, where it is generally preserved until the employee reaches age 55-60 and retires—with strict rules against early withdrawal.

These contributions are taxed at a concessional rate of 15 percent, which is generally much lower than an individual’s marginal tax rate. Under the system, an employee’s super account stays open even when switching jobs, their balance remains invested, and the new employer can continue contributing to the same account, without having to cash out, restart or transfer benefits.

By comparison, U.S. employers are not required to offer or contribute to any retirement plan. The result is that millions of American workers—69 million in 2021, according to an analysis by the Economic Innovation Group—lack any kind of employer-provided retirement plan, especially if the workers are low-income earners.

On the other hand, however, the U.S. mandates that both employers and employees contribute 6.2 percent of wages (12.4 percent total) to fund Social Security. In short, Australia’s super can be thought of as a compulsory 401(k) program.

The country also has the Australian Age Pension, which is similar to the U.S. Social Security program. This provides up to $1,200.90 per fortnight for a single household and $905.20 per fortnight for each member of a couple, inclusive of supplements. To qualify, an Australian resident must be at least 67 years old, have lived in the country for at least 10 years and pass the required income and assets tests.

But Australia’s superannuation program appears to be what Trump wants to re-create at home in the U.S., though the president did not specify that on Monday. Australia’s retirement program, Trump said generally, has “really worked out very well, incredibly well, and [is] very respected.”

What an Australian System Would Mean for US Workers

Introducing an Australian-inspired retirement system in the U.S. would likely require employers to make retirement contributions nationwide, whatever the contribution rate might be—possibly ranging from 5 percent to 12 percent of wages. This plan would have to be regulated through a new enforcement structure, to be determined by lawmakers, which would also have to establish rules for investment funds and account ownership.

At the moment, debates around reforming Social Security have focused on how to keep it solvent. So introducing such changes would be a significant political hurdle, especially considering the current divisions within Congress. Lawmakers would have to decide which of the following to pursue:

The introduction of an Australian-inspired retirement system would also come at a hefty cost for Americans. If younger workers are required to divert substantial contributions into personal retirement accounts, Congress will still need to fund benefits for existing retirees and near-retirees through the following methods:

But some experts question whether these changes would be worth it, even considering that the Australian retirement system is widely thought of as being extremely successful.

How US Retirement System Ranks Against Australia’s

Australia’s retirement system consistently outranks the U.S.’s, scoring a B+ where the American program scores a much lower C+, according to the Mercer CFA Institute Global Pension Index. “It’s pretty clear why we get a low grade,” Alicia H. Munnell, a senior adviser of the Center for Retirement Research at Boston College, wrote in a January opinion piece.

“In 2033, the reserves in Social Security’s retirement trust fund will be exhausted, and the government will be forced to cut benefits by 23 percent. This is not new news. The exhaustion of the trust fund has been on the books since the early 1990s, but over the last 35 years, we haven’t taken a single step to head off the collision,” she added. “That is ridiculous. But the imminent crisis reflects a failure of Congressional will, not a failure with the design of the program.”

Munnell said it was unclear what the U.S. could get from Australia “at this stage of the game.” According to the economist, the Social Security program has proved “the most successful public program in the nation’s history,” but it is vulnerable by nature to demographic shifts like the ones we are seeing now.

The Australian system “is fully funded and protected from demographic shifts, and the Age Pension ensures that no one falls below any adequate standard of living,” Munnell said.

But she remained skeptical that this system could be translated to the U.S., noting that “one could argue that extensive reliance on the accumulation of balances obscures the goal of achieving a secure stream of income, and integrating proceeds from the basic system with the Age Pension seems very complicated.”

A system like Australia’s super, which has a 90 percent participation rate, could guarantee higher retirement savings for Americans overall, considering that over 50 percent of the U.S. workforce does not have access to a 401(k) plan.

But the program also has its downsides: among them, mandatory savings of at least 12 percent might prove a considerable economic drag for employers during an economic crisis. The U.S. population is also more than 14 times that of Australia, making the implementation of an Australian-inspired retirement system tricky.

The Cato Institute, a libertarian think tank, strongly opposes the introduction of an Australian-inspired retirement policy, believing it would create a “politicized sovereign wealth fund that expands governmental influence over markets.”

But its rejection is not on principles alone. Compulsory savings “would be an improvement over the current pay-as-you-go model by empowering workers with ownership over their forced contributions,” experts wrote in a December analysis, but “the catch is that doing so now would entail massive transition costs.”

According to the think tank, “compelling American workers to save on top of existing payroll taxes would displace voluntary savings and disproportionally harm low-income workers.”

What Happens Next

There are competing proposals being discussed in Congress trying to fix the Social Security solvency problem, but no major Social Security overhaul has passed.

While it has teased a plan inspired by Australia’s retirement system, the Trump administration has not shared a concrete proposal, and the introduction of such a system in the U.S. would require Congress to pass major legislation.